ou are bearish on Telecom and decide to sell short 210 shares at the current market price of $80 per share. How much in cash or securities must you put into your brokerage account if the broker's initial margin requirement is 50% of th alue of the short position? (Round your answer to the nearest whole dollar.) Cash or securities to be put into brokerage account $ 8,400 How high can the price of the stock go before you get a margin call if the maintenance margin is 30% of the value of the short
ou are bearish on Telecom and decide to sell short 210 shares at the current market price of $80 per share. How much in cash or securities must you put into your brokerage account if the broker's initial margin requirement is 50% of th alue of the short position? (Round your answer to the nearest whole dollar.) Cash or securities to be put into brokerage account $ 8,400 How high can the price of the stock go before you get a margin call if the maintenance margin is 30% of the value of the short
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Nikulbhai
Transcribed Image Text:You are bearish on Telecom and decide to sell short 210 shares at the current market price of $80 per share.
a. How much in cash or securities must you put into your brokerage account if the broker's initial margin requirement is 50% of the
value of the short position? (Round your answer to the nearest whole dollar.)
Cash or securities to be put into brokerage account
$
8,400
b. How high can the price of the stock go before you get a margin call if the maintenance margin is 30% of the value of the short
position? (Round your answer to 2 decimal places.)
Margin call will be made at price
$
92.31 or higher
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education